"I think it's time we talked about regime change in North Korea," he said, quickly adding that he did not mean "military action."

"We can have a peaceful resolution to this issue. ... But the North Korean regime is not one that's going to abandon nuclear power status."

Tensions have grown since last week's attack by North Korea on a South Korean island in the Yellow Sea.

He said that while the U.S. and the South Koreans have begun naval exercises nearby, he did not anticipate a war.

"I think if past behavior holds true, the North Koreans will walk up to the edge and then step back and try to get more concessions and more money and more economic aid, and more jobs for North Koreans sponsored by South Korea. I'm not sure that the South Koreans are going to go along this time."

He went on to criticize China, a close ally of the North, for behaving irresponsibly given the growing instability in the region.

"We've got to understand that China is not what we want it to be, but is not playing a responsible role on the world stage, much less on the Korean Peninsula," McCain said. "They [China] could bring the North Korean economy to its knees if they wanted to. And I cannot believe that the Chinese should, in a mature fashion, not find it in their interest to restrain North Korea. So far, they are not."

"We have to make adjustments to our policies," he said of China, calling it the "key" to keeping peace.

China has called for a renewal of the six-party talks, which would involve the U.S., Japan, Russia, and North and South Korea.